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McCarran-Ferguson Debate Rears Its Head Again

The McCarran-Ferguson Act is under attack again, almost two years ago to the day. The issue is being resurrected by Senate Judiciary Committee Chairman Patrick J. Leahy, D-Vt., and House Judiciary Committee Chairman John Conyers, D-Mich. Like in 2007, NAMIC will lead the effort to prevent any momentum on this dangerous legislation.

Pending legislation, H.R. 3596 and S. 1681, the “Health Insurance Industry Antitrust Enforcement Act of 2009,” would repeal long-standing provisions of the McCarran-Ferguson Act with respect to health and medical malpractice insurance issuers. While the scope of this legislation is limited, it could be a slippery slope and open the door to include property/casualty insurance companies. As you are well aware, this could in turn introduce a system of dual regulation of the insurance industry, where federal agencies could second-guess the actions of state lawmakers.

For more than 100 years, the states have been regulating insurance companies. To strengthen the industry and benefit consumers, Congress enacted the McCarran-Ferguson Act in 1945 specifically delegating to the states the regulatory authority over insurers and allowing a very limited – very narrow – exemption from antitrust laws to strengthen competition by making data available to companies large and small. By repealing the limited exemption, these bills would threaten the viability of insurers. Such a change would curtail insurers' ability to exchange critical data, endangering market participation by smaller insurers, and making it more difficult for carriers to enter new markets and new lines of business. Repeal of these provisions would be particularly disastrous for consumers, reducing competition, increasing costs, and reducing availability in the marketplace.

This week and next, both the House and Senate will each hold a hearing to consider the McCarran-Ferguson Act. Among the witnesses scheduled to testify at the Senate hearing next week is Professor Lawrence Powell, author of NAMIC's 2007 Issue Analysis on the McCarran-Ferguson Act. Also, in advance of both hearings, NAMIC and several other trade associations sent a joint letter to members of Congress expressing our strong opposition to these dangerous pieces of legislation. Just like in 2007, NAMIC will continue to work to ensure the preservation of the McCarran Ferguson Act.